Wednesday, October 28, 2009

Facebook is no fad

With Facebook registering its 300 millionth user and investors valuing Twitter at $1 billion, it's time to put to bed the notion that social networking is a fad. It's not. It's our destiny.

This is something I've thought a lot about since I began researching my new book, "Viral Loop: From Facebook to Twitter, How Today's Smartest Businesses Grow Themselves." It details how many of the iconic companies of our time -- including eBay Inc. (NASDAQ:EBAY) , Facebook, MySpace (NASDAQ:NWS) , PayPal, Flickr (NASDAQ:YHOO) and Twitter -- grew from bootstrap startups to billion-dollar empires within a few short years. Their shared formula: a "viral expansion loop," which is accomplished by incorporating viral qualities into the functionality of their products.

These companies and many others grew because each new user begat more users. Just by using a product, they spread it. After all, what's the sense of being on Facebook if none of your friends is on Facebook, or using Flickr if you can't share your photos?

These viral businesses take advantage of our increased interconnectedness, made possible by more ubiquitous bandwidth and advances in both hardware and software. As the Internet increasingly goes mobile and is gradually released from the desktop, it will offer a far greater, more diffuse surface area for ideas to spread virally.

Andy Warhol famously remarked, "In the future, everyone will be world-famous for 15 minutes." Really, though, in the future everyone will have his own TV show. For what is a profile on Facebook, MySpace, Bebo (NYSE:TWX) or a Twitter account but a kind of reality show starring ... you. Instead of 15 minutes of fame, though, you get 15 seconds over and again (until the next update).

As video and other multimedia transform our Web experience, these shows take on more complex modes of self-expression. Within the skein of networks unfurling through digital time and space, the sum parts of these disparate ego blasts -- a blog post here, a Facebook wall comment there, a video or photo, a "tweet" -- become a documentary of your soul. Your reputation precedes you.

Increasingly there is your public self (the person you present to the physical world), your personal self (who you are when you are alone) and your digital self (which reaches far beyond the other two). If you spend time online, many more people know you -- or think they know you -- through your digital self, which can be as (or more) real to them than your real self.

Indeed, people's perceptions of you can be quite vivid. Two Washington University researchers scanned the brains of fiction readers and concluded that they create intense, graphic mental simulations of sights, sounds, movements and tastes they encounter in the narrative by activating the same brain regions used in processing similar real-life experiences.
You are the message

These Web lurkers -- people who know you exclusively through your digital deeds -- base their judgments on the ideas and observations you share to the world, the photos and videos you post, the widgets you employ on your personal Web spaces and the words others use to describe you. The memes you create spread virally, far beyond your network of friends, relatives, acquaintances and colleagues. Once they leave your brain and hit the viral plain that is the Internet, they are out of your control and take on a life of their own.

Then you become more than just a guy trying to hold onto a job and pay down your mortgage. You are a brand that must be managed. With apologies to Marshall McLuhan, the medium is not the message. You are.

Why do we do it? What explains our BlackBerry-bearing, Twitter-tweeting, Facebook friend with the need for constant connectivity? As facile as it sounds, we do it because we are hardwired to socialize. It's in our best interests. We gravitate toward communities because they multiply the impact of each individual to bring greater prosperity, security and fulfillment to all. (I didn't come up with that. Aristotle did.)

So why do so many people spend so many hours on Facebook and Twitter? The answer is surprisingly simple. Social networking makes us happy.

Online or off, all of this congregating is really just a product of biological necessity. Research indicates that engaging with friends helps us live longer and better lives, with those with strong friendship bonds having lower incidents of heart disease. They even get fewer colds and flu.

A decade-long Australian study found that for the duration of the study, subjects with a sizable network of friends were 22% less likely to pass away than those with a small circle of friends, and the distance separating two friends and the amount of contact made no difference. It didn't matter if the friends stayed in contact via phone, by letter or email. Just the fact they had a social network of friends acted as a protective barrier.

A research project by Paul Zak, a professor of economics and the founding director of the Center for Neuroeconomic Studies at Claremont Graduate University, found that when a test subject learns that another person trusts him or her, the level of oxytocin, a hormone that circulates in his brain, rises.

"The stronger the signal of trust, the more oxytocin increases," wrote Zak, whose primary interest is neuroeconomics -- a discipline that attempts to gauge how the brain's neurologic functions process decisions involving money. Trust, Zak learned, fosters more trust. The more oxytocin swimming around your brain, the more other people trust you.
The 'cuddle hormone'

Notably, the test subjects had no direct contact with one another. All of their interactions took place by computer and with people whose identity they didn't know. "Trust works as an 'economic lubricant' that affects everything from personal relationships to global economic development," said Zak. Although he didn't explicitly state it, trust is also an integral part of social networking.

Another trust study discovered that when an investor in an experimental game was given a dose of oxytocin, he was more likely to allow someone else to control his money, no questions asked. The substance -- sometimes referred to as the "cuddle hormone," found to increase generosity and decrease fear -- has been associated with maintaining healthy interpersonal relationships and is a key to bonding. When virgin female rats are injected with oxytocin they are transformed into protective mothers, taking over other females' offspring and nuzzling them as if they were their own.

Taken together, this research indicates that we are biologically driven to commingle. As big as the world is, we are never far from one another. We are not, as the saying goes, six degrees of separation away from anyone. (It's actually closer to 6.6; at least that's what a Microsoft researcher estimated after combing through 30 billion electronic conversations over the company's instant-messaging network in June 2006.)

Realize that Facebook, on track to amass half a billion users by early next year, and Twitter, which is approaching 60 million, are not poised to become the next Pets.com or Hula-hoop. They meet a very basic human need, and whether your friendships are manifested by people in the room with you, or through the filter of a telephone receiver or computer screen, the benefits you accrue are the same.

Penenberg's latest book, "Viral Loop : From Facebook to Twitter, How Today's Smartest Businesses Grow Themselves," is being published Oct. 13. SmartMoney magazine named it one of the "7 Best Fall Reads" of 2009.

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